Exhibit 10.2
MISSISSIPPI FEE PAYMENT AGREEMENT
This Mississippi Fee Payment Agreement (the "Agreement") is entered into
as of July 2, 1998, by and among Xxxxxx Xxxxxx Incorporated, X.X. Xxxxxxxx
Tobacco Company, Xxxxx & Xxxxxxxxxx Tobacco Corporation and Lorillard Tobacco
Company (collectively and severally "Settling Defendants" and each individually
a "Settling Defendant"), the State of Mississippi and private counsel retained
by the State of Mississippi in connection with the lawsuit In re Xxxx Xxxxx,
Attorney General, ex rel. State of Mississippi Tobacco Litig., No. 94-1429
(Miss. Ch. Ct., Xxxxxxx County) (the "Action").
WITNESSETH:
WHEREAS, on October 17, 1997, the State of Mississippi and Settling
Defendants entered into a comprehensive settlement agreement to settle and
resolve with finality all present and future civil claims relating to the
subject matter of the Action (the "Settlement Agreement"), which Settlement
Agreement was approved by the Chancery Court for the Xxxxxxx County (the
"Court") and adopted as an enforceable order of the Court pursuant to Court
Order dated December 29, 1997;
WHEREAS, paragraph 16 of the Settlement Agreement provides that Settling
Defendants shall pay reasonable attorneys' fees to private counsel for the State
of Mississippi, in an amount set by arbitration, subject to an appropriate
annual cap on all such payments of attorneys' fees by Settling Defendants, as
well as other conditions;
WHEREAS, paragraph 16 of the Settlement Agreement did not and was not
intended to reflect the entire agreement of Settling Defendants and the State of
Mississippi as to the procedures and conditions that would govern Settling
Defendants' payment of fees to private counsel retained by the State of
Mississippi in connection with the Action ("Mississippi Counsel"), including an
agreed specific annual aggregate national cap on all payments of attorneys' fees
and certain other professional fees by Settling Defendants, as well as other
essential terms;
WHEREAS, Settling Defendants and Mississippi Counsel have entered into a
letter agreement dated October 10, 1997 (the "October 10th Letter") which
describes the essential terms of Settling Defendants' agreement to pay fees to
Mississippi Counsel pursuant to paragraph 16 of the Settlement Agreement;
WHEREAS, paragraph 15 of the Settlement Agreement contains a "Most Favored
Nation" clause which provides that, in the event that Settling Defendants enter
into a future pre-verdict settlement agreement of other litigation brought by a
non-federal governmental plaintiff on terms more favorable to such governmental
plaintiff than the terms of the Settlement Agreement (after due consideration of
relevant differences in population or other appropriate factors), the terms of
the Settlement Agreement shall be revised so that the State of Mississippi will
obtain treatment at least as relatively favorable as any such non-federal
governmental entity;
WHEREAS, on January 16, 1998, Settling Defendants entered into a
pre-verdict settlement agreement with the State of Texas, which sets forth the
terms of Settling Defendants' agreement to pay attorneys' fees to private
counsel for the State of Texas and includes provisions for advances on such
attorneys' fees by Settling Defendants and the State of Texas;
WHEREAS, on May 8, 1998, certain Settling Defendants entered into a
pre-verdict settlement agreement with the State of Minnesota (the "Minnesota
Settlement"), which includes provisions for payment of attorneys' fees to
private counsel for the State of Minnesota;
WHEREAS, on July 2, 1998, Settling Defendants and the State of Mississippi
entered into a Stipulation of Amendment to Settlement Agreement and for Entry of
Agreed Order (the "Stipulation of Amendment") to resolve any disputes with
respect to the Most Favored Nation clause of the Settlement Agreement, including
any disputes regarding payment of attorneys' fees, in light of the Texas and
Minnesota Settlements; and
WHEREAS, Settling Defendants, the State of Mississippi and Mississippi
Counsel, in order to resolve any disputes with respect to paragraphs 15 and 16
of the Settlement Agreement, and to describe more fully the procedures that will
govern Settling Defendants' payment of fees to Mississippi Counsel, have agreed
to the terms of this Agreement:
NOW, THEREFORE, BE IT KNOWN THAT, in consideration of their mutual
agreement to the terms of this Agreement, the State of Mississippi's and
Settling Defendants' mutual agreement to the terms of the Stipulation of
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Amendment, and such other consideration described herein, including the release
of certain claims against Settling Defendants, the sufficiency of which is
hereby acknowledged, the parties hereto, acting by and through their authorized
agents, memorialize and agree as follows:
SECTION 1. Agreement to Pay Fees.
Settling Defendants will pay reasonable attorneys' fees to Mississippi
Counsel for their representation of the State of Mississippi in connection with
the Action. The amount of such fees will be set by a panel of three independent
arbitrators (the "Panel") whose decision as to the amount of fees for
Mississippi Counsel arbitrated in connection with this Agreement (the
"Mississippi Fee Award") shall be final and not appealable. The procedures
governing Settling Defendants' obligation to pay the Mississippi Fee Award,
including the procedures for making, and the timing of payments in satisfaction
of, the Mississippi Fee Award, shall be as provided herein.
SECTION 2. Aggregate National Caps on Payment of Certain Fees.
Settling Defendants' payment of the Mississippi Fee Award pursuant to this
Agreement shall be subject to the payment schedule and the annual and quarterly
aggregate national caps specified in sections 11, 12, 13, 14 and 15 hereof,
which shall apply to:
(a) all payments of attorneys' fees pursuant to an award arbitrated by the
Panel ("Fee Award") in connection with the settlement of any tobacco and health
cases (other than non-class action personal injury cases brought directly by or
on behalf of a single natural person or the survivor of such person or for
wrongful death, or any non-class action consolidation of two or more such cases)
("Tobacco Cases") on terms that provide for payment by Settling Defendants or
other defendants acting in agreement with Settling Defendants (collectively,
"Participating Defendants") of fees with respect to private counsel retained by
the plaintiff in connection with any such case ("Private Counsel"), subject to
an annual cap on payment of all such fees;
(b) all payments of attorneys' fees (other than fees for attorneys of
Participating Defendants) pursuant to a Fee Award for activities in connection
with Tobacco Cases resolved by operation of federal legislation that either (i)
implements the terms of the June 20, 1997 Proposed Resolution (or a
substantially equivalent federal program) (the "Proposed Resolution") or (ii)
imposes an
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enforceable obligation on Participating Defendants to pay attorneys' fees with
respect to Private Counsel (any such legislation hereinafter referred to as
"Federal Legislation"); and
(c) all payments of attorneys' fees and certain other professional fees
(other than fees for attorneys or agents of Participating Defendants) pursuant
to a Fee Award for contributions made toward enacted Federal Legislation. In the
event that Federal Legislation is enacted, the terms "Private Counsel" and
"Eligible Counsel" shall apply not only to persons otherwise falling within the
definitions of such terms herein but also to all persons granted Fee Awards for
such contributions (such persons being Eligible Counsel with respect to each
month beginning with the month the Federal Legislation was enacted).
Nothing in this Agreement shall be construed to require any Settling
Defendant to pay Fee Awards in connection with any litigation other than the
Action.
SECTION 3. Exclusive Obligation of Settling Defendants; Release.
The provisions set forth herein constitute the entire obligation of
Settling Defendants with respect to payment of attorneys' fees in connection
with the Action and the exclusive means by which Mississippi Counsel may seek
payment of fees by Settling Defendants in connection with the Action. The
parties hereto acknowledge that the provisions for payment set forth herein are
the entirety of Settling Defendants' obligations with respect to payment of
attorneys' fees pursuant to paragraph 16 of the Settlement Agreement and the
October 10th Letter. The State of Mississippi agrees that Settling Defendants
shall have no other obligation to pay fees or otherwise compensate Mississippi
Counsel, any other counsel or representative of the State of Mississippi or the
State of Mississippi itself with respect to attorneys' fees in connection with
the Action. Each Mississippi Counsel hereby irrevocably releases Settling
Defendants and their respective present and former parents, subsidiaries,
divisions, affiliates, officers, directors, employees, representatives,
insurers, agents and attorneys (as well as the predecessors, heirs, executors,
administrators, successors and assigns of each of the foregoing) from any and
all claims that such counsel ever had, now has or hereafter can, shall or may
have in any way related to the Action (including but not limited to any
negotiations related to the settlement of the Action). The foregoing shall not
be construed as a release of any person or entity as to any of the obligations
undertaken in this Agreement in connection with a breach thereof.
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SECTION 4. Composition of the Panel.
(a) The first and the second members of the Panel shall both be permanent
members of the Panel and, as such, will participate in the determination of all
Fee Awards. The third Panel member shall not be a permanent Panel member, but
instead shall be a state-specific member selected to determine Fee Awards on
behalf of Private Counsel retained in connection with litigation within a single
state. Accordingly, the third, state-specific member of the Panel for purposes
of determining Fee Awards with respect to litigation in the State of Mississippi
shall not participate in any determination as to any Fee Award with respect to
litigation in any other state (unless selected to participate in such
determinations by such persons as may be authorized to make such selections
under other agreements).
(b) The members of the Panel shall be selected as follows:
(i) The first member shall be a natural person selected by
Participating Defendants, who shall advise Mississippi Counsel of the name
of the person selected by October 8, 1998.
(ii) The second member shall be a natural person selected by
agreement of Participating Defendants and a majority of the members of a
committee composed of the following members: Xxxxxx X. Xxxx, Xxxxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxx Xxxxxxx, two representatives of the
Xxxxxxx Plaintiffs' Legal Committee and, at the option of Participating
Defendants, one additional representative to serve on behalf of counsel
for any one or more states that, subsequent to the date hereof, enter into
settlement agreements with Participating Defendants that provide for
payment of such states' Private Counsel pursuant to an arbitrated award of
fees; such second member shall be selected by October 1, 1998.
(iii) The third, state-specific member for purposes of determining
Fee Awards with respect to litigation in the State of Mississippi shall be
a natural person selected by Mississippi Counsel, who shall notify
Settling Defendants of the name of the person selected by October 15,
1998.
SECTION 5. Commencement of Panel Proceedings.
No application for a Fee Award shall be presented to the Panel or any
Panel member until November 3, 1998. The Panel shall consider and render
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decisions on applications for Fee Awards in the order in which they are
submitted or pursuant to notice by counsel having priority that they have ceded
their place to others. In the event that more than one application for a Fee
Award is submitted on the same date, the Panel shall consider and render
decisions on such applications in the order in which their respective cases were
settled. Counsel may seek permission from the Panel to make combined
presentations of aspects of their respective applications. Settling Defendants
shall not oppose any request to combine presentations of applications for Fee
Awards in connection with the Action, the lawsuit State of Florida v. American
Tobacco Co., No. 95-1466AH (15th Jud. Circuit, Palm Beach County), or the
lawsuit State of Texas v. American Tobacco Co., No. 5-96CV-91 (E.D. Tex. filed
Mar. 28, 1996).
SECTION 6. Costs of Arbitration.
All costs and expenses of the arbitration proceedings held by the Panel,
including compensation of Panel members (but not including any costs, expenses
or compensation of counsel making applications to the Panel), shall be borne by
Settling Defendants in proportion to their respective Market Shares.
SECTION 7. Panel Procedures Regarding Application of Mississippi Counsel.
Mississippi Counsel shall make a collective written application to the
Panel for a Fee Award on behalf of all Mississippi Counsel not later than
November 3, 1998. All interested persons, including persons not parties hereto,
may submit to the Panel any information that they wish; but interested persons
not parties hereto may submit only written materials. The Panel shall consider
all such submissions by any party hereto and may consider any such materials
submitted by other interested persons. All written submissions relating to
applications for a Fee Award in connection with the Action shall be served on
all parties hereto by November 13, 1998. Presentations to the Panel shall, to
the extent possible, be based on affidavit rather than live testimony. The Panel
shall preserve the confidentiality of any attorney work-product materials or
other similar confidential information that may be submitted. Settling
Defendants will not take any position adverse to the amount of the Fee Award
requested by Mississippi Counsel, nor will they or their representatives express
any opinion (even upon request) as to the appropriateness or inappropriateness
of the amount of any proposed Mississippi Fee Award. The undersigned outside
counsel for Settling Defendants Xxxxxx Xxxxxx Incorporated and X.X. Xxxxxxxx
Tobacco Company will appear, if requested, to provide information as to the
nature and efficacy of the
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work of Mississippi Counsel and to advise the Panel that they support a
Mississippi Fee Award of full reasonable compensation under the circumstances.
SECTION 8. Award of Fees to Mississippi Counsel.
The members of the Panel will consider all relevant information submitted
to them in reaching a decision as to a Fee Award that fairly provides for full
reasonable compensation of Mississippi Counsel for their representation of the
State of Mississippi in connection with the Action. The Panel shall determine
the amount of fees for all Mississippi Counsel collectively no later than
December 10, 1998. Given the significance and uniqueness of the Action, the
Panel shall not be limited to an hourly-rate or lodestar analysis in determining
the amount of the Mississippi Fee Award, but shall take into account the
totality of the circumstances. In considering the amount of the Mississippi Fee
Award, the Panel shall not consider Fee Awards that already have been or yet may
be awarded to others. The Panel's decisions as to Fee Awards shall be in writing
and shall report the amount of the fee awarded (with or without explanation or
opinion, at the Panel's discretion).
SECTION 9. Allocation of Payments among Mississippi Counsel.
All payments (including advances) made by Settling Defendants in
satisfaction of the Mississippi Fee Award pursuant to this Agreement shall be
paid in the first instance to an account designated in writing by Xxxxxx X.
Xxxx, Esq. Each Mississippi Counsel shall be entitled to receive a percentage of
each such payment equal to the percentage such counsel would receive of any fee
recovery in the Action, under the terms of the fee-sharing agreement among
Mississippi Counsel (such percentage being such counsel's "Fee Percentage" of
the payment in question).
SECTION 10. Advances on Payment of Fees.
Settling Defendants shall severally make two payments as an advance
against later payments of the Mississippi Fee Award pursuant to this Agreement,
to be credited as provided in section 15 hereof, as follows:
(a) On or before July 6, 1998, each Settling Defendant shall pay to
Mississippi Counsel, pro rata in proportion to its Market Share indicated on
Schedule A hereto, its respective share of $50 million.
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(b) On or before July 31, 1998, each Settling Defendant shall pay to
Mississippi Counsel, pro rata in proportion to its Market Share indicated on
Schedule A hereto, its respective share of $50 million.
SECTION 11. Annual Amount for 1997; Allocation.
(a) For 1997, Settling Defendants shall pay, in the manner described in
section 13 hereof, the unsatisfied amount of the Fee Award (the "Unpaid Fees")
of Mississippi Counsel, and those Participating Defendants so obligated shall
make payments with respect to the Unpaid Fees of Private Counsel retained in
connection with the lawsuits State of Florida v. American Tobacco Co., No.
95-1466 AH (15th Jud. Circuit, Palm Beach County), and Xxxxxxx v. X.X. Xxxxxxxx
Tobacco Co., No. 939359 (Cal. Super. Ct., San Francisco County), in an amount
not to exceed $250 million for all payments described in this subsection.
(b) In the event that the sum of the Unpaid Fees of those Private Counsel
identified in subsection (a) of this section exceeds $250 million, such amount
shall be allocated among the payments to be made with respect to such Private
Counsel in proportion to the amount of their respective Unpaid Fees (the amount
so allocated with respect to the Unpaid Fees of each such Private Counsel being
such counsel's "Allocable Share" for 1997).
SECTION 12. Annual Amount for 1998; Allocation.
(a) For 1998, Settling Defendants shall pay, in the manner described in
section 13 hereof, the Unpaid Fees of Mississippi Counsel, and those
Participating Defendants so obligated shall make payments with respect to the
Unpaid Fees of all other Private Counsel, in an amount not to exceed $500
million for all such payments described in this subsection.
(b) The amount payable to Mississippi Counsel by Settling Defendants for
1998 shall be determined as follows: The $500 million annual cap for 1998 shall
be allocated equally among each month of the year. Except as provided in section
13(b) hereof, each monthly amount shall be allocated to those Private Counsel
retained in connection with Tobacco Cases settled by Participating Defendants or
resolved by Federal Legislation before or during such month, up to the amounts
of their respective Unpaid Fees (such counsel being "Eligible Counsel" with
respect to such monthly amount). In the event that the monthly amount is less
than the sum of Eligible Counsel's Unpaid Fees, the monthly amount shall be
allocated to Eligible Counsel in proportion to the amounts of their
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respective Unpaid Fees (the amount so allocated to each Eligible Counsel for a
given month being such counsel's Allocable Share for such month, and the sum of
each Private Counsel's Allocable Shares for each month being such counsel's
Allocable Share for 1998).
(c) Settling Defendants represent that, as of the date of this Agreement,
the only Tobacco Cases (other than the Action) that have been settled by
Participating Defendants on terms that allow for Private Counsel retained in
connection with such cases to seek a Fee Award from the Panel are State of
Florida v. American Tobacco Co., No. 95-1466AH (15th Jud. Circuit, Palm Beach
County), State of Texas v. American Tobacco Co., No. 5-96CV-91 (E.D. Tex.), and
Xxxxxxx v. X.X. Xxxxxxxx Tobacco Co., No. 939359 (Cal. Super. Ct., San Francisco
County).
SECTION 13. Payments with Respect to Annual Amounts for 1997 and 1998.
(a) On the earlier of December 15, 1998 or 15 days after the date of the
Panel's decision with respect to the Mississippi Fee Award (the "Initial
Mississippi Fee Payment Date"), each Settling Defendant shall severally pay, pro
rata in proportion to its Market Share, its share of an initial fee payment with
respect to the Mississippi Fee Award (the "Initial Mississippi Fee Payment"),
which shall include:
(i) Mississippi Counsel's Allocable Share for 1997 as provided in
section 11 hereof or, in the event that the Panel has not rendered Fee
Awards with respect to all Private Counsel described in section 11(a)
hereof as of five business days prior to the Initial Mississippi Fee
Payment Date, Settling Defendants' reasonable estimation of Mississippi
Counsel's Allocable Share for 1997; and
(ii) Mississippi Counsel's Allocable Share for 1998 as provided in
section 12 hereof for each month of 1998 except those with respect to
which Mississippi Counsel's Allocable Share could not be determined as of
five days prior to the Initial Mississippi Fee Payment Date, as a result
of there being other Eligible Counsel that, as of such date, had not yet
been granted or denied a Fee Award by the Panel (either because such
counsel's application for a Fee Award was still under consideration by the
Panel or for any other reason).
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(b) On January 15, 1999, each Settling Defendant shall severally pay, pro
rata in proportion to its Market Share, its share of Mississippi Counsel's
Allocable Share for those months of 1998 not included in the Initial Mississippi
Fee Payment. Mississippi Counsel's Allocable Share for any such month shall be
based on an allocation of the monthly amount among Eligible Counsel having Fee
Awards as of December 31, 1998, without regard to whether there may be other
Eligible Counsel that have not been granted or denied a Fee Award by the Panel
as of such date.
(c) In the event that Settling Defendants pay an estimation of Mississippi
Counsel's Allocable Share for 1997, as provided in subsection (a)(i) of this
section, subsequent payments pursuant to this Agreement shall be adjusted to
ensure that Mississippi Counsel receive their actual Allocable Share for 1997.
(d) Notwithstanding any provision of this Agreement, Mississippi Counsel
agree to defer payment of $62 million of the payment due from Settling Defendant
X.X. Xxxxxxxx Tobacco Company ("Xxxxxxxx") on the Initial Mississippi Fee
Payment Date. In the event that (i) Xxxxxxxx' share of the Initial Mississippi
Fee Payment is less than $62 million or (ii) the Mississippi Fee Award has not
been determined as of the date of any other payment by Xxxxxxxx in 1998 with
respect to Fee Awards, individual Mississippi Counsel Scruggs, Millette, Bozeman
& Dent, P.A. ("Xxxxxxx, Xxxxxxxx") and Xxxx, Motley, Loadholt, Xxxxxxxxxx &
Xxxxx ("Xxxx, Xxxxxx") shall also defer the amounts of their respective Fee
Percentages of such other 1998 payments, until the sum of all deferred amounts
equals $62 million. Under no circumstances shall this subsection require any
increase in any payment to be made by any other Settling Defendant. On January
5, 1999, Xxxxxxxx shall pay to the appropriate persons the amounts of its 1998
payments deferred pursuant to this section.
SECTION 14. Quarterly Amounts for 1999 and Subsequent Years; Allocation.
Within 10 business days after the end of each calendar quarter beginning
with the first calendar quarter of 1999, Settling Defendants shall pay, in the
manner provided in subsection (d) of this section, the Unpaid Fees of
Mississippi Counsel, and those Participating Defendants so obligated shall make
payments with respect to the Unpaid Fees of all other Private Counsel, in an
amount not to exceed $125 million for all such payments, as follows:
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(a) In the event that Federal Legislation has been enacted by the end of
the calendar quarter with respect to which such quarterly payment is being made
(the "Applicable Quarter"):
(i) the quarterly amount shall be allocated among Private Counsel,
up to the amount of their respective Unpaid Fees. Each Private Counsel
shall be allocated an amount of each quarterly payment for the calendar
year up to (or, in the event that the sum of such Private Counsel's Unpaid
Fees exceeds the quarterly amount, in proportion to) the amount of such
Private Counsel's Unpaid Fees. Each quarterly payment shall be allocated
among Private Counsel having Unpaid Fees, without regard to whether there
are other Private Counsel that have not yet been granted or denied a Fee
Award by the Panel as of the end of the Applicable Quarter. Subsequent
quarterly payments shall be adjusted, if necessary, to account for Private
Counsel that are granted Fee Awards in a subsequent quarter of the
calendar year, as provided in paragraph (ii)(B) of this subsection.
(ii) In the event that a quarterly payment for the calendar year is
less than the sum of all Private Counsel's Unpaid Fees:
(A) in the case of the first such quarterly payment, the
quarterly amount shall be allocated among Private Counsel in
proportion to the amounts of their respective Unpaid Fees.
(B) in the case of a quarterly payment after the first
quarterly payment that is less than the sum of all such Unpaid Fees,
the quarterly amount shall be allocated only to those Private
Counsel, if any, that were not paid a proportionate share of all
prior quarterly payments for the calendar year (either because such
Private Counsel's applications for Fee Awards were still under
consideration as of the end of the calendar quarters with respect to
which such quarterly payments were made or for any other reason),
until each such Private Counsel has been allocated a proportionate
share of all prior quarterly payments. In the event that the sum of
all such shares exceeds the amount of the quarterly payment, such
payment shall be allocated among such Private Counsel in proportion
to the amounts of their respective Unpaid Fees (without regard to
whether there are other Private Counsel that have not yet been
granted or denied a Fee Award by the Panel as of the end of the
Applicable Quarter).
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(b) In the event that Federal Legislation has not been enacted by the end
of the Applicable Quarter:
(i) the quarterly amount shall be allocated equally among each of
the three months of the calendar quarter. The amount for each such month
shall be allocated among those Private Counsel retained in connection with
Tobacco Cases settled before or during such month (such Private Counsel
being "Eligible Counsel" with respect to such monthly amount), each of
whom shall be allocated a portion of each such monthly amount up to (or,
in the event that the sum of Eligible Counsel's respective Unpaid Fees
exceeds such monthly amount, in proportion to) the amount of such Eligible
Counsel's Unpaid Fees. The monthly amount for each month of the calendar
quarter shall be allocated among Eligible Counsel having Unpaid Fees,
without regard to whether there may be Eligible Counsel that have not yet
been granted or denied a Fee Award by the Panel as of the end of the
Applicable Quarter. Subsequent quarterly payments shall be adjusted, as
necessary, to account for Eligible Counsel that are granted Fee Awards in
a subsequent quarter of the calendar year, as provided in paragraph
(ii)(B) of this subsection.
(ii) In the event that the amount for a given month is less than the
sum of all Eligible Counsel's Unpaid Fees:
(A) in the case of a first quarterly payment, such monthly
amount shall be allocated among Eligible Counsel for such month in
proportion to the amount of their respective Unpaid Fees.
(B) in the case of a quarterly payment after the first
quarterly payment, the quarterly amount shall be allocated among
only those Private Counsel, if any, that were Eligible Counsel with
respect to any monthly amount paid in a prior quarter of the
calendar year but were not allocated a proportionate share of such
monthly amount (either because such counsel's applications for Fee
Awards were still under consideration as of the end of the calendar
quarter containing the month in question or for any other reason),
until each such Eligible Counsel has been allocated a proportionate
share of all such prior monthly payments for the calendar year. In
the event that the sum of all such shares exceeds the amount of the
quarterly payment, the quarterly payment shall
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be allocated among Eligible Counsel in proportion to the amounts of
their respective Unpaid Fees (without regard to whether there may be
other Eligible Counsel with respect to such prior monthly amounts
that have not yet been granted or denied a Fee Award by the Panel as
of the end of the Applicable Quarter).
(c) Adjustments pursuant to paragraphs (a)(ii)(B) and (b)(ii)(B) of this
section shall be made separately for each calendar year. No amounts paid in any
calendar year shall be subject to refund, nor shall any payment in any given
calendar year affect the allocation of payments to be made in any subsequent
calendar year.
(d) Each Settling Defendant shall severally pay, pro rata in proportion to
its respective Market Share, its share of the amounts, if any, allocated to
Mississippi Counsel pursuant to this section.
SECTION 15. Credits and Limitations.
Notwithstanding any other provision of this Agreement, all payments by
Settling Defendants with respect to Fee Awards shall be subject to the
following:
(a) Notwithstanding any other provision of this Agreement, the advances
against future payments to Mississippi Counsel made pursuant to section 10
hereof shall be credited against and shall reduce the payments due to
Mississippi Counsel hereunder, beginning with the first quarterly payment for
1999 pursuant to section 14 hereof, in an amount equal to 50% of the payment in
question, until the advances paid by Settling Defendants are fully credited;
provided, however, that the sum of all such credits applied in any calendar year
with respect to the advances made to Mississippi Counsel pursuant to section 10
hereof shall not exceed $50 million. The amount of any credit made against any
such payment to Mississippi Counsel shall be counted in computing the annual and
quarterly aggregate national caps on all payments made with respect to Private
Counsel, in the amount of the credit applied to any such payment to Mississippi
Counsel in any quarterly or annual period.
(b) Under no circumstances shall Settling Defendants be required to make
payments that would result in aggregate national payments by Participating
Defendants with respect to Fee Awards:
(i) for 1997, totaling more than $250 million;
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(ii) during 1998, totaling more than $500 million, except insofar as
payments under the separate $250 million cap for 1997 are made in 1998
pursuant to section 13 hereof, and except insofar as advances are made in
1998 against payments due in years after 1998;
(iii) during any year beginning with 1999, totaling more than $500
million, excluding payments with respect to any Private Counsel's
Allocable Shares for 1998 that are paid in 1999; and
(iv) during any calendar quarter beginning with the first calendar
quarter of 1999, totaling more than $125 million, excluding payments with
respect to any Private Counsel's Allocable Shares for 1998 that are paid
in 1999 and except to the extent that payments with respect to any prior
quarter of the calendar year did not total $125 million.
SECTION 16. Contribution to National Legislation.
If Federal Legislation is enacted that implements the Proposed Resolution,
a three-member national panel including the two permanent members of the Panel
shall consider any application for Fee Awards on behalf of Private Counsel for
contributions made toward the enactment of such Federal Legislation, along with
all applications for Fee Awards for professional fees by any other persons who
claim to have made similar contributions (other than attorneys or agents of
Participating Defendants). No person shall make more than one application for a
Fee Award in connection with any such contributions toward enactment of such
Federal Legislation. All payments with respect to such Fee Awards, if any, shall
be paid on the payment schedule and subject to, and counted in computing, the
annual and quarterly national caps described in sections 12, 13, 14 and 15
hereof.
SECTION 17. Payments on Market Share Basis.
All payments to Mississippi Counsel pursuant to this Agreement shall be
paid by Settling Defendants pro rata in proportion to their respective Market
Shares. Each Settling Defendant shall be severally liable for its share of all
such payments. Under no circumstances shall any such payment or portion thereof
become the joint obligation of Settling Defendants or the obligation of any
party other than the Settling Defendant from which such payment is originally
due, nor shall any Settling Defendant be required to pay a portion of any such
payment greater than its respective Market Share. With respect to payment of the
advances
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described in section 10 hereof and the payment for 1997 described in section 11
hereof, the Market Share of each Settling Defendant shall be as provided in
Schedule A hereto. With respect to the payment for 1998 described in section 12
hereof, the Market Share of each Settling Defendant shall be its respective
share of sales of cigarettes, by number of individual cigarettes shipped for
consumption in the United States, for 1998. With respect to all other payments
pursuant to this Agreement, each Settling Defendant's Market Share shall be its
respective share of sales of cigarettes, by number of individual cigarettes
shipped for consumption in the United States, for the 12 month period preceding
the end of the calendar quarter with respect to which such payment is made.
SECTION 18. Determination of Market Share.
In the event of a disagreement between or among any Settling Defendants as
to their respective shares of any payment pursuant to this Agreement (except
payments for which each Settling Defendant's Market Share is expressly provided
herein), each Settling Defendant shall pay its undisputed share of such payment
promptly, on or before the date on which such payment is due, and shall within
21 days submit copies of its federal excise tax reports for the period in
question to a third party to be selected by agreement of Settling Defendants
(the "Third Party"), who shall within three days determine the Market Share of
each Settling Defendant. The decision of the Third Party shall be final and
non-appealable, and shall be communicated by facsimile to each party hereto.
Each Settling Defendant shall, within two business days of receipt of the Third
Party's decision, pay Mississippi Counsel or such other Settling Defendant, as
appropriate, the difference, if any, between (1) the amount that such Settling
Defendant has already paid with respect to the payment in question and (2) the
amount of the payment in question that corresponds to such Settling Defendant's
Market Share as determined by the Third Party, together with interest accrued
from the original date on which the payment in question was due, at the prime
rate, as published in the Wall Street Journal on the latest publication date on
or before the original date on which the payment in question was due, plus 3%.
SECTION 19. Limited Waiver as to Other Terms.
In consideration of Settling Defendants' agreement to the terms hereof,
each Mississippi Counsel hereby covenants and agrees that it will not argue in
any forum (other than in proceedings before the Panel relating to Mississippi
Counsel's application) that the arrangements made in connection with the Texas
Settlement or the Minnesota Settlement for payment of fees to private counsel
for
15
the States of Texas or Minnesota give rise to any claim or entitlement on the
part of Mississippi Counsel (or any other person) in connection with this
Action.
SECTION 20. State's Identification of Mississippi Counsel.
The Attorney General represents and warrants that Schedule B hereto
contains the names of all Mississippi Counsel.
SECTION 21. Intended Beneficiaries.
No part of this Agreement creates any rights on the part of, or is
enforceable by, any person or entity that is not a party hereto or a person
covered by the release described in section 3 hereof. Nor shall any part of this
Agreement bind any non-party or determine, limit or prejudice the rights of any
such person or entity.
SECTION 22. Definitions.
Terms used herein that are defined in the Settlement Agreement or the
Stipulation of Amendment are, unless otherwise defined herein, used in this
Agreement as defined in the Settlement Agreement or the Stipulation of
Amendment, as applicable.
SECTION 23. Representations of Parties.
The parties hereto hereby represent that this Agreement has been duly
authorized and, upon execution, will constitute a valid and binding contractual
obligation, enforceable in accordance with its terms, of each of the parties
hereto.
SECTION 24. No Admission.
This Agreement is not intended to be and shall not in any event be
construed as, or deemed to be, an admission or concession or evidence of any
liability or wrongdoing whatsoever on the part of any party hereto or any person
covered by the release provided under section 3 hereof. Settling Defendants
specifically disclaim and deny any liability or wrongdoing whatsoever with
respect to the claims released under section 3 hereof and enter into this
Agreement for the sole purposes of memorializing Settling Defendants' rights and
obligations with respect to payment of attorneys' fees pursuant to the
Settlement Agreement
16
and avoiding the further expense, inconvenience, burden and uncertainty of
potential litigation.
SECTION 25. Non-admissibility.
This Agreement having been undertaken by the parties hereto in good faith
and for settlement purposes only, neither this Agreement nor any evidence of
negotiations relating hereto shall be offered or received in evidence in any
action or proceeding other than an action or proceeding arising under this
Agreement.
SECTION 26. Amendment and Waiver.
This Agreement may be amended only by a written instrument executed by the
Attorney General, Mississippi Counsel and Settling Defendants. The waiver of any
rights conferred hereunder shall be effective only if made by written instrument
executed by the waiving party. The waiver by any party of any breach of this
Agreement shall not be deemed to be or construed as a waiver of any other
breach, whether prior, subsequent or contemporaneous, of this Agreement.
SECTION 27. Notices.
All notices or other communications to any party hereto shall be in
writing (including but not limited to telex, telecopy or similar writing) and
shall be given to the respective parties listed on Schedule C hereto at the
addresses therein indicated. Any party hereto may change the name and address of
the person designated to receive notice on behalf of such party by notice given
as provided in this section including an updated list conformed to Schedule C
hereto.
SECTION 28. Governing Law.
This Settlement Agreement shall be governed by the laws of the State of
Mississippi, without regard to the conflict of law rules of such State.
SECTION 29. Construction.
None of the parties hereto shall be considered to be the drafter of this
Agreement or any provision hereof for the purpose of any statute, case law or
rule of interpretation or construction that would or might cause any provision
to be construed against the drafter hereof.
17
SECTION 30. Captions.
The captions of the sections of this Agreement are included for
convenience of reference only and shall be ignored in the construction and
interpretation hereof.
SECTION 31. Counterparts.
This Agreement may be executed in counterparts. Facsimile or photocopied
signatures shall be considered as valid signatures as of the date hereof,
although the original signature pages shall thereafter be appended to this
Settlement Agreement.
SECTION 32. Entire Agreement of Parties.
This Agreement contains an entire, complete and integrated statement of
each and every term and provision agreed to by and among the parties hereto with
respect to payment of attorneys' fees by Settling Defendants in connection with
the Action and is not subject to any condition not provided for herein.
IN WITNESS WHEREOF, the parties hereto, through their fully authorized
representatives, have agreed to this Mississippi Fee Payment Agreement as of
this 2nd day of July, 1998.
STATE OF MISSISSIPPI acting by and through
Xxxxxxx X. Xxxxx, its duly elected and authorized
Attorney General
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
Attorney General
18
XXXXXX XXXXXX INCORPORATED
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
Counsel
By: /s/ Xxxxxx X. Xxxxxxxxxx by MGK
------------------------------------
Xxxxxx X. Xxxxxxxxxx
General Counsel
X.X. XXXXXXXX TOBACCO COMPANY
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
Counsel
By: /s/ Xxxxxxx X. Xxxxx by A.F.G.
------------------------------------
Xxxxxxx X. Xxxxx
General Counsel
19
XXXXX & XXXXXXXXXX TOBACCO
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
Counsel
By: /s/ F. Xxxxxxx Xxxxx
------------------------------------
F. Xxxxxxx Xxxxx
Vice President & General Counsel
LORILLARD TOBACCO COMPANY
By: /s/ Xxxxxx X. Xxxxxxx by MGK
------------------------------------
Xxxxxx X. Xxxxxxx
Senior Vice President & General
Counsel
MISSISSIPPI COUNSEL
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Xxxxxx X. Xxxx
Ness, Motley, Loadholt, Xxxxxxxxxx
& Xxxxx
20
By: /s/ Xxxxxxx X. Xxxxxxx by X.X. Xxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxx
Scruggs, Millette, Bozeman & Dent,
P.A
By: /s/ Xxx Xxxxxxx
--------------------------------------
Xxx Xxxxxxx
Xxxxxxx Law Offices
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
By: /s/ Xxxxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxxxx X. Xxxxx
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxx
Xxxxx & Xxxxx
21
By: /s/ Xxxxx X. XxXxxxxxx
------------------------------------
Xxxxx X. XxXxxxxxx
By: /s/ Xxxxxxx Xxxxxx XxXxxx
------------------------------------
Xxxxxxx Xxxxxx XxXxxx
XxXxxx & Associates
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
Xxxxxx & Xxxx
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
Xxxxxxx, Germany, Xxxxxxx & Xxxxx
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
Rhoden, Lacy, Xxxxxx & Colbert
22
By: /s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx
23
SCHEDULE A
MARKET SHARE PERCENTAGES
Settling Defendant Percentage
------------------ ----------
Xxxxxx Xxxxxx Incorporated ............................................ 49.9
X.X. Xxxxxxxx Tobacco Company.......................................... 24.8
Xxxxx & Xxxxxxxxxx Tobacco Corp........................................ 16.4
Lorillard Tobacco Company.............................................. 8.9
----------
TOTAL 100
SCHEDULE B
DESIGNATION of MISSISSIPPI COUNSEL
by the Attorney General
Ness, Motley, Loadholt, Xxxxxxxxxx & Xxxxx (Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxx,
Xxxxxxx X. Xxxxxxx, Xx., Xxxxxx X. Xxxxxxxxx, Xxx X. Xxxxxx, J. Xxxxxxxx Xxxxx,
III, Xxxx X. XxXxxxxxx, Xx., Xxxxx Xxxx, Xxxxxx X. XxXxxxxxx, Xxxxxxx X. Xxxx,
Xxxxx Worth Xxxxx, Xxxxxxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxx, Xxxx X. Xxxxxxx,
Xxxxxxxxx X. Xxxxx, R. Xxxxx Xxxxxxx, Xxxxx Xxxx Xxxxxxx, Xxxxx Xxxxxx Xxxxx,
Xxxxxxx X. Xxxxxxxx, Xxxxxxx Xxxxxxx Xxxxxxxx)
Scruggs, Millette, Bozeman & Dent, P.A. (Xxxxxxx X. Xxxxxxx, W. Xxxxx Xxxxxxx,
Xxxxxxx X. Xxxxxxx, Xxx X. Xxxxx, Xxxxxxxx X. Xxxxx, Xxxxxx Xxxxxxxxx Xxxxxxx)
Xxxxxxx Law Offices (Xxx Xxxxxxx)
Xxxx X. Xxxxxx
Xxxxxxxxx X. Xxxxx
Xxxxx & Xxxxx (Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxxx Xxxxx)
Xxxxx X. XxXxxxxxx
XxXxxx & Associates (Xxxxxxx Xxxxxx XxXxxx)
Xxxxxx & Xxxx (Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxx)
Xxxxxxx, Germany, Xxxxxxx & Welsh (Xxxxxx X. Xxxxxxx, Xxxxxx X. Germany, Xxxxxx
X. Xxxxxxx, Xx., C. Xxxxxx Xxxxx)
Rhoden, Lacy, Xxxxxx & Colbert (Xxxxxx X. Xxxxxx)
Xxxx X. Xxxxx
2
SCHEDULE C
NOTICES
State of Mississippi
Xxx. Xxxxxxx X. Xxxxx
Attorney General's Xxxxxx
000 Xxxx Xxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
With copies to:
Xxxxxxx X. Xxxxxxx
Scruggs, Millette, Bozeman & Dent, P.A.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
and:
Xxxxxx X. Xxxx, Esq.
Ness, Motley, Loadholt, Xxxxxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
and:
Xxxxx X. XxXxxxxxx
000 Xxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
(continued)
Settling Defendants
Xxxxxx Xxxxxx Incorporated: X.X. Xxxxxxxx Tobacco Company:
Xxxxxx X. Xxxxxxxxxx, Esq. Xxxxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxx Incorporated X.X. Xxxxxxxx Tobacco Company
000 Xxxx Xxxxxx 000 Xxxxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000 Xxxxxxx-Xxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
With a copy to: With a copy to:
Xxxxx X. Xxxxxx, Esq. Xxxxxx X. Xxxxxx, Esq.
Wachtell, Lipton, Xxxxx & Xxxx Xxxxx Xxxx & Xxxxxxxx
00 Xxxx 00xx Xxxxxx 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Xxxxx & Xxxxxxxxxx Tobacco Corp.: Lorillard Tobacco Company:
F. Xxxxxxx Xxxxx, Esq. Xxxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxxxxxx Tobacco Corp. Lorillard Tobacco Company
200 Xxxxx & Xxxxxxxxxx Tower 000 Xxxxx Xxxxxx Xxxx
000 Xxxxx Xxxxxx Xxxxxx Xxxxxxxxxx, XX 00000
Xxxxxxxxxx, XX 00000 Fax: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xx.
Xxxxxxx, XX 00000
Fax: (000) 000-0000
(continued)
2
Mississippi Counsel
Xxxxxx X. Xxxx, Esq. Xxxxxxx X. Xxxxxxx
Ness, Motley, Loadholt, Scruggs, Millette, Bozeman & Dent, P.A.
Xxxxxxxxxx & Xxxxx 000 Xxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000 Xxxxxxxxxx, XX 00000-0000
Xxxxxxxxxx, XX 00000 Fax: (000) 000-0000
Fax: (000) 000-0000
Xxx Xxxxxxx, Esq. Xxxx X. Xxxxxx, Esq.
Xxxxxxx Law Offices Attorney At Law
X.X. Xxx 000 X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxxx 00000 Xxxxxx, XX 00000-0000
Fax 1: (000) 000-0000 Fax: (000) 000-0000
Fax 2: (000) 000-0000
Xxxxxxxxx X. Xxxxx, Esq. Xxxxxxx X. Xxxxx
Attorney At Law Xxxxx & Xxxxx
X.X. Xxx 0000 X.X. Xxx 0000
Xxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Xxxxx X. XxXxxxxxx, Esq. Xxxxxxx Xxxxxx XxXxxx, Esq.
000 Xxxxx Xxxxxx XxXxxx & Associates
X.X. Xxx 000 X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000 Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Xxxxxx X. Xxxxxx, Esq. Xxxxxx Xxxxxxx, Esq.
Xxxxxx & Xxxx Xxxxxxx, Germany, Xxxxxxx & Welsh
0000 Xxxxx Xxxxxx 000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
(continued)
3
Xxxxxx X. Xxxxxx, Esq. Xxxx X. Xxxxx, Esq.
Rhoden, Lacy, Xxxxxx & Colbert Minor & Associates
000 Xxxx Xxxxxx Xxxxx 000 Xxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
4
